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The government’s plan to increase the tax on superannuation balances over $3 million has officially been abandoned, at least for this year.
$3m super tax officially abandoned for this year
29 November 2024
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7 minute read
After a guillotine motion containing the Division 296 tax changes failed to pass yesterday, the government has abandoned the measure for at least this calendar year.
The government attempted to pass a group of 36 bills on the final sitting day of the year, which ultimately failed. While its second guillotine motion was successful, the superannuation tax measures were removed from the group of bills by Labor.
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As it currently stands, the bill has been scrapped having been considered too controversial and too hard to pass.
According to SMSFA CEO Peter Burgess, this is “a big win for the sector”. He told sister brand SMSF Adviser that this is a “sure sign” that the government knows they have issues with this bill.
“Only non-controversial bills are guillotined,” Burgess said.
According to the Parliamentary Practice and Procedure Guidelines, guillotines are used where the government can obtain the support of a majority of the Senate to provide finite debating times for a particular bill or to bring protracted debates to a close.
Earlier this week, Finance Minister Katy Gallagher assured that the changes to Division 296 remain Labor policy, but conceded that the bill faces opposition in the Senate, calling the upper house “an obstructionist chamber”.
“There’s a big cross bench with different views, we’ve got an opposition that doesn’t want to work with the government, that wants to stop progress, but we are going to be fighting right up to the end.”
The group of bills within the motion contained measures such as the RBA reforms as well as parts of the Future Made in Australia legislation.
Accountants and industry bodies strongly criticised the superannuation tax measure, particularly the method for calculating the tax.
Auditor Naz Randeria said that doubling the tax rate and introducing an entirely new concept of taxing unrealised gains creates a disincentive to save and will see more people need to rely on the Age Pension in their retirement.
“That’s a significant cost burden for the future generation of taxpayers to have to fund," Randeria said.
Concerns have also been raised about the impact of the changes on small businesses such as farms that hold large business assets within their SMSF.
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